One of my favorite things to tell clients is that when it come to innovation,

“There are no bad ideas.. Just ideas that distract you from more profitable choices.”

I recently shared this philosophy with a fellow innovator and not only did he agree, but he told me he was going to shamelessly steal the quote and market it as his own. All in jest (I think) but then again, he is a seasoned, brilliant marketer so you never know.

So this post not only serves to stake a formal copyright claim on this quote, but to share why I think this is an important concept for all innovators, brand managers and business owner to embrace.

After all, the expression “think outside the box” can, in fact, quickly take you “out over your skis”.

So when is your innovation strategy taking you to points of diminishing financial return? There are no hard and fast rules but here are some things to consider.

1+1+1+1+1+… DOES NOT equal 5
I have often seen the game of line extensions (adding flavors or variations to a product line) not pencil out in terms of increased revenue or profitability.

After a point, an innovation strategy should never be “continue to add different flavors into infinity” as all ideas hit a point of diminishing returns. And then you hit the tipping point and you aren’t even making a profit on that once-so-profitable product line.

It is important for any business to understand when you have saturated the market with your own idea. Be aware of the true costs of adding SKUs as costs can increase but not to be offset by economies of scale or increases traffic or unit sales (aka. cannibalization). Once you find this point, you can certainly add but not without also subtracting.

Moving to far outside “your box”
If I got a nickle every time I heard “think outside the box” in an ideation session, I would be writing this post in full retirement from a beach in the South Pacific.

In truth, there is a point where you are way to far out on an idea and no longer accretive to your original business proposition. For example, if you were successfully selling gourmet breakfast cereal, would it make sense to innovate with a Greek Yogurt product line? Maybe.. but only if the idea and product proposition supports your current brand proposition (why you exist? What you “own” in terms of your market position?). There are also the costs associated with supporting a different type of distribution (refrigerated versus shelf stable), sales force knowledge/buyer relationships, market channels, R&D capabilities, etc.

Of course there are case examples of where this has been successful, but I am willing to bet (and please comment below if you can think of a contrary example), that those companies knew going into the development of that they were stepping WAY OUTSIDE, their current position and had strategies to overcome those before mentioned obstacles.

Every new idea should stand on it’s own

Every new idea, every product proposition, every “good” idea, should also have a profitable business case to support it. It is important to not only ideate and stretch your creative, new product ideas, but to know when it is no longer a good idea as it subtracts from your businesses profitability. At that point, either pivot in a new direction, or as Kenny Rogers sang, “You got to know when to hold ‘em, know when to fold ‘em, Know when to walk away and know when to run.”

Kate Ruffing

I am the Chief Innovation Officer & Strategy Consultant at Flashpoint.
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Flashpoint [def.] a point at which someone or something bursts suddenly into action or being.
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